After a good falls in price, consumers are better off because they can buy the same amount of the good for less money, and thus have money left over for additional purchases. This fact is called:

Question

Quizplus · Accepted Answer

The income effect describes how a change in the price of a good affects consumer purchasing power, allowing them to feel effectively wealthier and able to purchase more when prices decrease.

After a Good Falls in Price, Consumers Are Better Off